Last minute changes to Czech energy law in 2016

30.11.2016

With the end of 2016 approaching, legislators and state clerks are busy taking steps to improve energy regulation in the Czech Republic. The Chamber of Deputies of the Czech Republic is currently discussing an amendment to the Czech Energy Act.[1] This amendment proposed by the Senate of the Czech Republic is short (only three Sections), but crucial for operators of small hydro power plants (10 MW and less). Even though state financial support for the operators of small hydro power plants was approved by the European Commission[2] the incorrect interim provisions in the Energy Act meant that the Czech electricity and gas market operator was unable to provide the financial support to all small hydro power plant operators as was expected. This provision affected as many as 62 power plants, the majority of whose operators were state-owned enterprises managing the waterways of Czech rivers. The amendment not only changes the interim provisions, but also authorizes the Czech electricity and gas market operator to provide sufficient compensation for support not paid in 2016. Although the Government of the Czech Republic agrees that a change in the regulation is necessary, it disapproves of these small individual amendments to such an important act such as the Energy Act and has promised complex changes in energy law, especially in the regulation of renewable energy sources. A quick legislation procedure has been proposed for the adoption of the amendment and therefore, if it is approved, we expect that it will enter in force at the beginning of 2017.

 

Apart from legislation changes, the European Commission recently approved the support scheme for installations producing renewable energy built in the Czech Republic between 2006 and 2012 under EU State aid rules.[3] The scheme´s total budget amounts to CZK 836,5 billion over its lifetime. The issuance of this approval of the European Commission was a condition for a provision of State aid to the relevant installations of renewable energy sources. We informed you about this issue in our previous article. As a consequence, the Czech Energy Regulatory Office will probably soon issue a new Price Decision / Amendment of Price Decision regarding state support for the newly approved renewable energy power plants. However, this approval may not put an end to the long dispute regarding State aid provided to renewable energy installations as a criminal complaint has been filed regarding State aid illegally provided in 2016.[4] We will inform you about further developments regarding this issue.

 

Update to the article (December 19, 2016):

Following the approval of the support scheme for installations producing renewable energy built in the Czech Republic between 2006 and 2012 by the European Commission, the Czech Regulatory Office issued on 14 December 2016 a Price Decision No. 9/2016 which amends Price Decision No. 5/2016 (“Decision 9/2016”) and a Price Decision No. 10/2016 which amends Price Decision No. 7/2016 (“Decision 10/2016”). Pursuant to the Decision 9/2016 state aid can be provided to the installations producing renewable energy as approved by the European Commission, the Decision 10/2016 amends the amount of contribution to the renewable energy from end users. The state aid in 2017 provided under the amended Price Decisions may amount up to CZK 46 billion.

Consequently, state aid for combined installation of electricity and heat put into operation as of 31 December 2012 at the latest as well as some other installations of renewable energy shall be also approved by the end of this year.



[1] See Parliamentary Document No. 944/0 available at http://www.psp.cz/sqw/text/tiskt.sqw?O=7&CT=944&CT1=0.

[2] See the Decision of European Commission No. SA.35177(2014).

[3] See press release No. IP/16/4083 available at http://europa.eu/rapid/press-release_IP-16-4083_en.htm.

[4] See  press release dated 3 November 2016 available at http://www.eru.cz/cs/-/ministr-mladek-nuti-eru-k-nezakonnemu-postupu.